Beachhead Markets: Finding Them and Understanding Their Importance
For startups to grow big, they need to start small. When resources are scarce and time is limited, it is best to focus energy on markets that will give rewards. However, these markets need to be just enough.
If you enter a market that is too crowded, you may not be differentiated enough to compete against the big guys. And if you enter a market that is too small, it will be hard to sustain yourself in the long haul.
The trick lies in correctly identifying your beachhead market. A beachhead market is a smaller, niche market where your product fits in perfectly. Your startup can benefit from quick adoption and good word of mouth. Once you conquer this, it is easier to expand across horizontals and verticals into newer markets.
In order to reach your beachhead market, the given steps can be followed.
1. Considering All Market Segments
The best starting point is to list out all possible markets where your product or service can be a good fit. Here, there is no need to limit yourself due to the market size, competition or any other factors. Focus your efforts on finding all use cases and opportunities that can be beneficial to you.
A starting point can include brainstorming about various geographies, i.e., if people beyond the domestic market enjoy the product. Secondly, all possible demographics that can be potential customers. Thirdly, the different verticals in an industry where the product can be put to fair use. In this way, you will be able to come up with various markets for your product.
2. Narrowing Down to Key Market Segments
At this step, we need to start using some filters to segregate and rank the markets chosen previously. You can start checking if the markets are easily accessible, if customers will be comfortable with your price points, whether the market is big enough to enter, the intensity of competition, ease of building business partnerships and the relative cost of inputs.
While this comparison is not always easy due to lack of information, it is essential to at least get a rough idea of every market. Be proactive in interacting with people and businesses who are a part of the market you are interested in and get the relevant insights. Missing out on a great opportunity is the last thing you want as an early-stage startup.
By the end of this step, you should ideally have 3-4 nearly-perfect markets where you see yourself doing well.
3. Finding the Beachhead
Geoffrey Moore, who was the first to talk about beachhead markets, gave three distinct characteristics of beachhead market. These were:
- Customers in this market generally buy products that are similar to yours. This would essentially mean that you have a fair chance at selling in the market, and the demand exists.
- Customers have similar sales cycles, and they expect to extract value out of the given product in a related manner.
- There is word-of-mouth interaction between customers, i.e., there is a possibility of generating strong traction due to referrals.
Keeping these as a benchmark, you can check the feasibility of each market and whether it is worth investing energy in entering the same. At all times, keep in mind that the beachhead will not be a huge market- it is not intended to be one.
Focus on finding a smaller market where barriers to entry are low, and it is easy to dominate and differentiate from others. The idea is to build a loyal customer base and some momentum so that you can slowly progress to more significant markets and verticals.
Why the Beachhead Strategy Works
Startups have to enter unchartered territories and are uncertain about success. They are also looking to hold on to whatever resources they have and use them judiciously. For big companies, the beachhead strategy is just another tool to understand the market. But for young startups, it is a great way to mitigate risk.
By correctly identifying your beachhead market, you get a great chance to validate your product with real users in a real environment minus the burden of high costs and competition. You get to focus on what you do best and build a community of supporters. It is a great way to kickstart your growth.
As mentioned in the beginning, for startups to grow big, they need to start small, and this is the right way to put it into action.
